401k rollover to ira
In 2010 I rolled over my 401k to and ira account. I have have been told by the company who I madethe rollover that they need my december 31 2009 401k balance for purpose of an rmd. I contested since I made the rollever in the year 2010 I should not be responsible ror rmd till december 31 2010. Also while I was employed in 2009 I was not responsible for rmd.
Permalink Submitted by Alan Spross on Thu, 2010-10-21 20:33
The 401k plan should have either distributed your RMD to you before the rollover or withheld it from the rollover amount to send to you prior to year end. There is no additional RMD due from the IRA account other than an RMD due to an IRA balance that existed on 12/31/09. Therefore, the IRA custodian would be incorrect UNLESS the 401k plan messed up and failed to separate out your RMD prior to the rollover.
Permalink Submitted by Melvin Goldfarb on Fri, 2010-10-22 17:02
To Alan-oniras: Thank you for your reply yesterday on my ira question. May I elaborate on my question. I was employed during the year 2009 and till March 2010. I was not responsible for RMD while I was enrolled in the 401k during my employment. During the month of May 2010 I made a direct rollover to an existing ira (pretax to pretax). Since the rollover was completed in 2010 and not 2009 and was not in 2009 calculation, do I include this rollver as part of my 2009 RMD or 2010 RMD? Thank you, Mel Goldfarb 703-978-4913 [email protected]
Permalink Submitted by Alan Spross on Fri, 2010-10-22 19:18
Mel,
There was no RMD required for 2009 from any plan. Congress waived all 2009 RMDs.
For 2010, you will have an IRA RMD based only on your pre existing IRA balance as of 12/31/09. This was prior to the 401k rollover.
When you did the rollover in May, 2010 the plan SHOULD have held out your 2010 401k RMD from the amount rolled over. If you think that they did not do that, check with the plan why they didn’t.
If you both concur that they did NOT distribute your RMD to you OR withheld it and will distribute it to you by the end of the year, then your RMD is deemed to have been included in the rollover. That RMD becomes an excess contribution to your IRA and would then have to determine what the RMD amount should have been and explain to your IRA custodian that there is an excess contribution to your IRA in the amount of the 401k plan RMD, and they need to distribute it to you as an excess contribution correction. They also must calculate any earnings on that amount while it was in the IRA, so the amount distributed from the IRA would be somewhat more or less than the actual RMD amount.
Since it is unlikely that the plan messed up (perhaps they have your wrong age on file), you should confirm this is what happened before asking for the extra distribution from the IRA.